Correlation Between American Helium and Anglo American
Can any of the company-specific risk be diversified away by investing in both American Helium and Anglo American at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Helium and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Helium and Anglo American PLC, you can compare the effects of market volatilities on American Helium and Anglo American and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Helium with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Helium and Anglo American.
Diversification Opportunities for American Helium and Anglo American
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Anglo is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Helium and Anglo American PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American PLC and American Helium is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Helium are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American PLC has no effect on the direction of American Helium i.e., American Helium and Anglo American go up and down completely randomly.
Pair Corralation between American Helium and Anglo American
Assuming the 90 days horizon American Helium is expected to generate 0.92 times more return on investment than Anglo American. However, American Helium is 1.09 times less risky than Anglo American. It trades about 0.21 of its potential returns per unit of risk. Anglo American PLC is currently generating about -0.11 per unit of risk. If you would invest 10.00 in American Helium on August 26, 2024 and sell it today you would earn a total of 1.00 from holding American Helium or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Helium vs. Anglo American PLC
Performance |
| Timeline |
| American Helium |
| Anglo American PLC |
American Helium and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Helium and Anglo American
The main advantage of trading using opposite American Helium and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Helium position performs unexpectedly, Anglo American can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Anglo American will offset losses from the drop in Anglo American's long position.The idea behind American Helium and Anglo American PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Anglo American vs. Ascendant Resources | Anglo American vs. Cantex Mine Development | Anglo American vs. Amarc Resources | Anglo American vs. Sterling Metals Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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